The euro fell broadly on Tuesday after reports Greece wants to amend a European Union aid deal highlighted Athens's deficit problems, prompting traders to dump the European currency.
The Australian dollar rallied to a 2-1/2 month high against the U.S. dollar after the Reserve Bank of Australia raised interest rates. Its climb boosted the Canadian dollar, a fellow commodity currency, to near parity versus the U.S. dollar.
Media reports said Greece wanted to amend an EU deal struck last month to bypass an International Monetary Fund financial contribution and that Greek banks were being hit as big depositors move cash to overseas institutions.
By mid-morning in Europe, the euro had fallen 0.6 percent to $1.3403 U.S., and bumped down a full percentage point against the yen to 125.76 yen, its lowest in nearly a week, Reuters data showed.
European traders sold the euro on their return from Easter holidays, helping to nudge the dollar 0.3% higher against a currency basket to 81.351.
Market News International reported Greece is trying to amend the details of last month's EU aid agreement, including the conditions by which the IMF would require for a bailout.
Greece's debt problems have triggered political fallout in the euro zone, particularly between Athens and the bloc's most financially stable member Germany, whose population is opposed to funding assistance to Greece.
Greece needs to sell more bonds to meet its funding needs. It has raised about 23 billion euros of a projected 2010 requirement of 53.2 billion euros.
Athens announced late last month plans to sell a dollar bond at the end of April.
Analysts said growing tensions would keep investors away from the euro.
The Australian dollar rose 0.3% to $0.9258 U.S., its highest since late January, after the RBA lifted its key cash rate by 25 basis points to 4.25 percent and suggested more tightening was to come.
The Canadian dollar edged up to $1.0002, holding close to parity with the U.S. dollar. A break beyond that level would mark its highest since July 2008.
Still, the U.S. currency was supported after strong readings from the U.S. services sector and housing market on Monday -- hard on the heels of a solid jobs report late last week -- bolstered the view that the U.S. economy is improving.
Sterling fell nearly 1% to $1.5143 U.S., stung by political uncertainty as British Prime Minister Gordon Brown on Tuesday called a general election on May 6.
Analysts said the market was also watching the yuan after China on Tuesday defended its currency policy, saying it would continue to refine it however and whenever it suited Beijing.
The comments from a Foreign Ministry spokesman came after the United States last week said it would delay the release of its bi-annual currency review, which markets had been speculating may single out China as a currency manipulator.
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